Issue Brief • June 2008 Offshore Drilling and Energy Conservation: The Relative Impact on Gas Prices B Y D EAN B AKER AND N ICHOLE S ZEMBROT * Senator McCain recently proposed opening up … .. environmentally sensitive offshore zones to oil drilling in response to the recent jump in oil and gas prices. He argues that increased offshore production will reduce dependence on foreign oil, in addition to lowering gas prices. However, the Energy Information Agency (EIA) projects that Senator McCain’s proposal would have no impact in the …

Figure 1 compares the projected increase in oil production for 2027 compared with the 2027 baseline scenario, if the country opens up protected offshore areas for drilling as Senator McCain has proposed. It also shows the reduction in oil consumption that we would have seen in 2008 had the country continued to increase mileage standards at the rate of 0.4 miles per year in the 22 years following 1985. In conclusion, if Congress had continued to increase fuel efficiency standards over the last 22 years, we would currently have more than sixteen times the savings in oil consumption than what Senator McCain’s plan promises to accomplish in 20 years by drilling offshore in protected areas- and a proportionately larger impact on gas prices. Center for Economic and Policy Research • 2 If fuel efficiency had improved at this rate, then the average car on the road would be more than 50 percent more fuel efficient than is currently the case (32 miles per gallon compared with 20.2 miles per gallon). If increased efficiency did not change the number of miles driven each year, then this would imply a reduction of more than one-third in the amount of oil used for the country gasoline needs. This savings would be equal to approximately 3,300,000 barrels per day.3 FIGURE 1 The Relative Impact of Offshore Drilling and Fuel Efficiency Standards Source : Energy Information Agency and authors’ calculations, see text. Figure 1 compares the projected increase in oil production for 2027 compared with the 2027 baseline scenario, if the country opens up protected offshore areas for drilling as Senator McCain has proposed. It also shows the reduction in oil consumption that we would have seen in 2008 had the country continued to increase mileage standards at the rate of 0.4 miles per year in the 22 years following 1985. In conclusion, if Congress had continued to increase fuel efficiency standards over the last 22 years, we would currently have more than sixteen times the savings in oil consumption than what Senator McCain’s plan promises to accomplish in 20 years by drilling offshore in protected areas- and a proportionately larger impact on gas prices. 3 This calculation assumes the daily use of oil for refining gasoline is equal to approximately 9 million barrels. See: United States. Department of Energy, Energy Information Agency. Weekly Inputs Utilization, and Production. Washington: GPO, 2008. Accessed online at [ http:// tonto.eia.doe.gov/dnav/pet/pet_pnp_wiup_dcu_nus_w.htm ]. The projected savings are equal to the difference between the current rate of consumption and the consumption that would occur if the auto fleet was 58.4 percent more fuel efficient.

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